New Composition levy in revised Model GST Law

Salient features on new composition levy in revised Model GST draft

Basic condition: Registered taxable person covered under the new composition levy will be subject to the provisions of section 8(3) that is the reverse charge. Aggregate turnover in preceding financial year did not increased Rs. Fifty lacs is the basic condition for the new composition levy. If the person fulfill these conditions he can apply for taxation in composition levy to the proper officer. Proper officer may allow a person applied for taxation in composition levy under prescribed terms and conditions.

Rate of tax for composition suppliers: The rate of tax for the composition supplier shall be an amount calculated at such rate as may be prescribed, but not less than two and a half percent in case of a manufacturer and one percent in any other case, of the turnover in a State during the year.

Non eligibility for composition levy:In the following case no such permission shall be granted to a taxable person-
(a) who is engaged in the supply of services; or
(b) who makes any supply of goods which are not leviable to tax under this Act;or
(c) who makes any inter-State outward supplies of goods; or
(d) who makes any supply of goods through an electronic commerce operator who is required to collect tax at source under section 56; or
(e) who is a manufacturer of such goods as may be notified on the recommendation of the Council

Other conditions: There are some other conditions also to avail the benefit under the new composition levy.

a) All registered taxable person under the same PAN also opt to pay under the composition levy.

b) A registered taxable person shall not be eligible for composition levy from the day on which his aggregate turnover during a financial year exceeds Fifty Lac rupees.

c) A taxable person covered under the new composition levy shall not collect any tax from the recipient on supplies made by him.He shall not be entitled for any credit of input tax.

Penalty: If the proper officer has reasons to believe that a taxable person was not eligible to pay tax under sub-section (1), such person shall, in addition to any tax that may be payable by him under other provisions of this Act, be liable to a penalty and the provisions of section 66 or 67, as the case may be, shall apply mutatis mutandis for determination of tax and penalty. Section 66 and section 67 stands for demand and recovery in case of tax not paid, short paid or erroneously refunded, or where input tax credit has been wrongly availed or utilized for any reason. Section 66 covered the cases other then fraud or willful misstatement or suppression of facts . Section 67 covers the cases of fraud, willful misstatement or suppression of facts.